On March 1, 2010, the 21 percent overall cut in Medicare reimbursements to physicians became effective.  However, it could still be averted by a month-long stay that the U.S. House passed on February 25, 2010; action is pending in the Senate.

In the meantime, more physician practices are considering not accepting new Medicare patients. Many other physicians are seeking employment at hospitals.  Others are focusing more on patients who pay out of pocket and ending relationships with insurers that cut rates.

If the Senate passes the temporary fix that is expected to put the 21 percent cut on hold, it would be the latest in a series of patches that have become a nearly annual custom in Congress since 2003.

Under the formula by which doctors are paid by Medicare, growth in total payments to physicians cannot exceed annual growth in the nation’s gross domestic product.  As the United States population ages, doctors are serving more patients and using more costly treatments and tests accompanied by advances in technology.  As a result, physicians are requesting reimbursements that exceed GDP growth, which has averaged about 3 percent. Medicare is required to ensure that total payments do not exceed budget.

Lobbyists for physicians, including the American Medical Association, have played the primary role in persuading Congress to keep the rate cuts from going into effect.

© 2010 Parsonage Vandenack Williams LLC

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Healthcare Professionals Ask FTC for Exemption from Red Flag Rules

The heads of the American Medical Association, the American Dental Association, the American Osteopathic Association, and the American Veterinary Medical Association have asked the Federal Trade Commission (“FTC”) to declare that its identity theft prevention rules (the “Red Flag Rules”) do not apply to their licensed professionals.

Following the November 2009 United States District Court decision in American Bar Association v. FTC, which held that the Red Flag Rules did not apply to legal professionals, the healthcare organizations decided to issue a joint letter to the FTC requesting the same treatment.  The healthcare organizations specifically requested that the FTC:  (1) announce that the rules will not be applied to licensed health care professionals until at least ninety days after the final resolution of the ABA litigation; and (2) commit that if the result of the final ABA litigation is that the Red Flag Rules will not be applied to lawyers, the FTC will provide the same exemption to licensed health care professionals.

The letter discussed the great cost and burdens on healthcare professionals in complying with the Red Flag Rules and stated that if lawyers were exempt from the rules, it would be unfair to subject healthcare professionals to them.

© 2010 Parsonage Vandenack Williams LLC

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